Ramius Criticizes CPI Corp. Attempt To Manipulate Stockholder Vote With Mistruths
June 29 2009 - 2:09PM
PR Newswire (US)
Company Has Made Multiple False Statements That Are Misleading To
CPI Stockholders NEW YORK, June 29 /PRNewswire/ -- RCG Starboard
Advisors, LLC, a subsidiary of Ramius LLC (collectively, "Ramius"),
today criticized CPI Corp. ("CPI" or the "Company") (NYSE:CPY) for
including false and misleading statements in recent communications
to CPI stockholders in connection with the ongoing proxy contest.
In an investor presentation filed with the SEC on June 24 and
shared with proxy advisory firm RiskMetrics Group the same day, CPI
included blatantly false statements about Ramius independent
nominee Joseph Izganics and about Chairman David Meyer's
compensation arrangements. Ramius believes that these false
statements were made in clear and knowing disregard of the facts,
especially since the information relating to Mr. Meyer's
compensation arrangements is available and could have easily been
verified in the Company's own Board Minutes and the information
about Mr. Izganics is available in public documents. These false
statements stand in stark contrast to the Company's stated belief
that it is "at the forefront of corporate governance." "We are
disappointed with the way that CPI has chosen to behave throughout
this proxy contest, including making blatantly false statements
about the professional background and experience of our highly
qualified independent nominee, Joseph Izganics, and about the
approval of certain of Chairman Meyer's compensation arrangements,"
said Mark Mitchell, a Partner at Ramius. "We want stockholders to
understand the true facts, and today we call on CPI to correct the
record on all the false statements it has made in its stockholder
letters and presentation." The following statements that CPI has
recently made are false and misleading to stockholders: 1. False
Statement about Unanimous Board Approval of Certain Significant
Compensation Arrangements In both a June 18 letter to stockholders
and in its June 24, 2009 stockholder presentation, subsequently
filed with the SEC, CPI made a blatantly false statement regarding
Board approval of significant compensation arrangements. In trying
to justify Chairman Meyer's compensation arrangements in the June
18 letter, the Company stated "All significant compensation
arrangements have been ratified by a unanimous vote of the full
board after recommendation from the compensation committee." If the
Company had simply referenced the Board Minutes from May 29, 2008,
they would have recalled that Mark Mitchell, the Ramius director
representative at the time, voiced opposition to a Compensation
Committee recommendation that the CPI Board approve a significant
award to Chairman David Meyer of $300,000 in recognition of his
service during fiscal year 2007. They would have also recalled that
"Mr. Mitchell stated that the compensation awarded to the Chairman
should be evaluated in the context of what other executives
received and that he thought $300,000 was not warranted in light of
the performance of the company and the stock" and that when it came
to a vote of the full Board, Mr. Mitchell opposed the compensation
arrangement. 2. False Statement about Professional Background of
Ramius Nominee Joseph Izganics In its June 24 stockholder
presentation and a June 25 letter to stockholders, each filed as
definitive additional soliciting material with the SEC, the Company
falsely states that Joseph Izganics is "a former field employee of
Home Depot" and "the highest level he obtained was Southern
regional president, a position he held for only 1 1/2 years before
departing Home Depot last January." (emphasis added) This statement
is also factually inaccurate. Mr. Izganics was not a Southern
regional president as the Company states, but was Southern Division
President and one of just three Division Presidents in the company.
He oversaw seven (7) Regional Vice Presidents and was directly
responsible for over $20 billion in sales and 110,000 associates.
For the Company to describe Mr. Izganics as a "former field
employee" when he was in fact a senior executive is misleading to
stockholders and gives CPI stockholders a false and misleading
description of Mr. Izganic's professional background and
experience. 3. Misleading statement that Ramius's purpose in this
election contest is to seek additional representation and influence
over the Company The Company would have you believe that Ramius is
seeking additional and undue influence over the Company. The truth
is if Ramius had any influence over the Company at all there would
not be an election contest. Ramius's proposal does not include any
new candidates to the Board that are directly affiliated with
Ramius. Mr. Feld is already an incumbent member of the Board. The
other Ramius nominee, Mr. Izganics, was identified through a
third-party search firm and has absolutely no prior connection to
Ramius or its affiliates. Ramius's only desire throughout this
contest is to create a more balanced, independent, and experienced
Board that is free from the undue influence of Knightspoint
Partners. The changes to the Board that Ramius has proposed would
create a Board comprised of four independent directors, three of
whom have relevant retail experience; one direct Knightspoint
representative; and one direct Ramius representative. On the other
hand, Knightspoint has continued to assert additional influence on
the Board of CPI. The Company's proposed Board includes five out of
six directors that are either directly affiliated with Knightspoint
or previously recommended by Knightspoint, despite their only
owning 3.5% of the Company, and only two directors with any retail
experience. We believe these two directors would not have been
added to the Board without our outspoken concerns on the failure of
the Board to address this obvious weakness. In addition, over the
past two years, both Mr. Meyer and Mr. Koeneke have received
compensation totaling over $2.2 million for providing part-time
consulting "services", while the stock declined by 74%. This pay
package represents almost as much as the CEO, CFO, and all other
board members earned combined. Stockholders need to seriously
question Knightspoint's influence over CPI. Mr. Mitchell concluded,
"CPI's claim to be in a position at the 'forefront of corporate
governance' is not supported by the facts. CPI has relied on
mistruths to further its campaign. We hope that stockholders will
see through these mistruths and support our director candidates in
the upcoming election. We are seeking to elect one independent
director, Joe Izganics, who has the skills and experience CPI
requires, and are asking stockholders to support the re-election of
Peter Feld, a current director and Ramius representative. Mr.
Izganics and Mr. Feld are committed to working for the best
interests of all stockholders. Please support these nominees by
voting our GOLD proxy card today." About Ramius LLC Ramius LLC is a
registered investment advisor that manages assets in a variety of
alternative investment strategies. Ramius LLC is headquartered in
New York with offices located in London, Tokyo, Hong Kong, Munich,
and Vienna. Media Contact: Peter Feld Ramius LLC (212) 201-4878
CERTAIN INFORMATION CONCERNING PARTICIPANTS Ramius Value and
Opportunity Master Fund Ltd ("Value and Opportunity Master Fund"),
together with the other participants named herein, has made a
definitive filing with the Securities and Exchange Commission
("SEC") of a proxy statement and accompanying GOLD proxy card to be
used to solicit votes for the election of a slate of director
nominees at the 2009 annual meeting of stockholders of CPI Corp., a
Delaware corporation (the "Company"). VALUE AND OPPORTUNITY MASTER
FUND ADVISES ALL STOCKHOLDERS OF THE COMPANY TO READ THE PROXY
STATEMENT AND OTHER PROXY MATERIALS AS THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. SUCH PROXY
MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE SEC'S WEB SITE AT
http://www.sec.gov/. IN ADDITION, THE PARTICIPANTS IN THIS PROXY
SOLICITATION WILL PROVIDE COPIES OF THE PROXY STATEMENT WITHOUT
CHARGE UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE
PARTICIPANTS' PROXY SOLICITOR. The participants in this proxy
solicitation are Value and Opportunity Master Fund, Ramius
Enterprise Master Fund Ltd ("Enterprise Master Fund"), Starboard
Value & Opportunity Fund, LLC ("Starboard Value &
Opportunity Fund"), Ramius Merger Arbitrage Master Fund Ltd
("Merger Arbitrage Master Fund"), Ramius Multi-Strategy Master Fund
Ltd ("Multi-Strategy Master Fund"), Ramius Leveraged Multi-Strategy
Master Fund Ltd ("Leveraged Multi-Strategy Master Fund"), Ramius
Advisors, LLC ("Ramius Advisors"), RCG Starboard Advisors, LLC
("RCG Starboard Advisors"), Ramius LLC ("Ramius"), C4S & Co.,
L.L.C. ("C4S"), Peter A. Cohen ("Mr. Cohen"), Morgan B. Stark ("Mr.
Stark"), Thomas W. Strauss ("Mr. Strauss"), Jeffrey M. Solomon
("Mr. Solomon"), Peter A. Feld ("Mr. Feld") and Joseph C. Izganics
("Mr. Izganics"). As of the date hereof, Value and Opportunity
Master Fund beneficially owned 797,988 shares of Common Stock,
Starboard Value and Opportunity Fund beneficially owned 212,040
shares of Common Stock, Merger Arbitrage Master Fund beneficially
owned 192,000 shares of Common Stock, Leveraged Multi-Strategy
Master Fund beneficially owned 29,213 shares of Common Stock,
Multi-Strategy Master Fund beneficially owned 179,614 shares of
Common Stock and Enterprise Master Fund beneficially owned 202,054
shares of Common Stock. As of the date hereof, RCG Starboard
Advisors (as the investment manager of Value and Opportunity Master
Fund and the managing member of Starboard Value and Opportunity
Fund) is deemed to be the beneficial owner of the (i) 797,988
shares of Common Stock owned by Value and Opportunity Master Fund
and (ii) 212,040 shares of Common Stock owned by Starboard Value
and Opportunity Fund. As of the date hereof, Ramius Advisors (as
the investment advisor of Multi-Strategy Master Fund, Merger
Arbitrage Master Fund, Leveraged Multi-Strategy Master Fund and
Enterprise Master Fund) is deemed to be the beneficial owner of the
(i) 179,614 shares of Common Stock owned by Multi-Strategy Master
Fund, (ii) 192,000 shares of Common Stock owned by Merger Arbitrage
Master Fund, (iii) 29,213 shares of Common Stock owned by Leveraged
Multi-Strategy Master Fund, and (iv) 202,054 shares of Common Stock
owned by Enterprise Master Fund. As of the date hereof, Ramius (as
the sole member of each of RCG Starboard Advisors and Ramius
Advisors), C4S (as the managing member of Ramius) and Messrs.
Cohen, Stark, Strauss and Solomon (as the managing members of C4S)
are deemed to be the beneficial owners of the (i) 797,988 shares of
Common Stock owned by Value and Opportunity Master Fund, (ii)
212,040 shares of Common Stock owned by Starboard Value and
Opportunity Fund, (iii) 179,614 shares of Common Stock owned by
Multi-Strategy Master Fund, (iv) 192,000 shares of Common Stock
owned by Merger Arbitrage Master Fund, (v) 29,213 shares of Common
Stock owned by Leveraged Multi-Strategy Master Fund, and (vi)
202,054 shares of Common Stock owned by Enterprise Master Fund.
Messrs. Cohen, Stark, Strauss and Solomon share voting and
dispositive power with respect to the shares of Common Stock owned
by Value and Opportunity Master Fund, Starboard Value and
Opportunity Fund, Multi-Strategy Master Fund, Merger Arbitrage
Master Fund, Leveraged Multi-Strategy Master Fund and Enterprise
Master Fund by virtue of their shared authority to vote and dispose
of such shares of Common Stock. As of the date hereof, Mr. Feld
holds 5,252 shares of restricted stock awarded under the Company's
Omnibus Incentive Plan that vest in full on February 6, 2010. As of
the date hereof, Mr. Izganics directly owns 500 shares of Common
Stock. As members of a "group" for the purposes of Rule 13d-5(b)(1)
of the Securities Exchange Act of 1934, as amended, each of the
participants in this proxy solicitation is deemed to beneficially
own the shares of Common Stock of the Company beneficially owned in
the aggregate by the other participants. Each of the participants
in this proxy solicitation disclaims beneficial ownership of such
shares of Common Stock except to the extent of his or its pecuniary
interest therein. DATASOURCE: Ramius LLC CONTACT: Peter Feld of
Ramius LLC, +1-212-201-4878
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